Don't get confused by their offering price of $21 per share as compared to their recent (July 2003) price of $25. Microsoft's eight splits (some two-for-ones, some three-for-twos) means that their effective share price in 1986 was 15 cents a share. Hmmm - let's see - 15 cents a share in 1986, $25 in June 2003. Get out the calculator.

The Microsoft prospectus was not without controversy. The IRS was threatening to charge Microsoft a $30,000,000 personal holding company (PHC) tax. (PHC tax is intended to prevent individuals from setting up a corporation simply to avoid taxes.) Another more interesting threat was a lawsuit by Seattle Computer Products (this was the company that Microsoft bought DOS from, for $50,000).

Read the prospectus. Think Microsoft had it all figured out? No way. Their success is due more to how they reacted to their failures, than to their success.